Hong Kong’s business-friendly environment remains a magnet for companies looking to establish a presence in Asia. However, while the territory offers a range of distinct competitive advantages, other cities such as Shanghai and Singapore pose a serious challenge to talent acquirement, according to the Salary and Employment Forecast – Hong Kong 2014 report by recruitment firm Michael Page.

Andy Bentote, senior managing director of PageGroup in Hong Kong and Southern China, says that as Shanghai pursues its goal of becoming a leading international financial and business centre, it is important that Hong Kong stays focused on maintaining the strengths that give it a competitive edge.

“Hong Kong’s respected legal system, financial framework and internationally focused talent pool and gateway to the mainland has ensured its position as the preferred destination for foreign firms wishing to establish a base in Asia,” Bentote says. He adds that issues related to pollution, housing costs and access to education increasingly feature in whether or not foreign firms are able to attract senior managers to Hong Kong.

The report and survey, which involved 500 Hong Kong employers representing companies ranging from SMEs to multinationals, reveals that the average salary level is expected to increase over the next 12 months, with 71 per cent of employers expected to offer rises of between 1 and 5 per cent. Sectors expected to provide employees with a higher salary increase of between 6 and 10 per cent include procurement and supply chain (50 per cent), secretarial and office support (42 per cent) and legal (33 per cent). 
Based on survey responses, salary levels will primarily be affected by factors such as global economic conditions (60 per cent), domestic economic conditions (58 per cent) and competition between companies for talent (52 per cent). Other notable findings show that 88 per cent of employers plan to provide a bonus as part of their remuneration package, 45 per cent aim to run teambuilding activities and 20 per cent intend to offer sabbatical leave.

With companies striving to attract and retain talent, the survey notes how 52 per cent of respondents are offering flexible working arrangements – up from 39 per cent in the previous year’s survey. “Financial remuneration is still the most important retention factor, but we are definitely seeing a move towards work-life-balance incentives being used by employers as a way to engage and retain talent,” Bentote says.

Sharmini Wainwright, regional director of Page Personnel in Hong Kong, says that as employers become aware of the benefits that contract hiring offers, there has been a significant rise in temporary hires, notably for secretarial and financial-services roles.

She says benefits to employers include cost-rationalisation, flexibility during expansion or contraction, the ability to trial people when hiring new teams, and using short-term employment for project work.

“The contract approach can be particularly useful when companies are looking to establish a presence in Hong Kong purely as a platform into China,” Wainwright says. The temporary employment option also allows businesses to carry on functioning with the required resources they need for the necessary projects, but with greater flexibility in headcount, she adds.

For candidates, Wainwright says there can be some stigma attached to contracting, with some professionals considering contract roles not “proper” employment. She explains there are a few reasons for this, including the fear of the unknown at the end of the contract and risk of missing out on company-provided medical benefits for permanent employees. But this is rapidly changing. “Individuals in Hong Kong have become increasingly open to contracting opportunities, as it gives them the chance to gain access to working for some of the best organisations,” she says.

Meanwhile, on the mainland, a “Return on Service” study conducted by international accounting network BDO and the Economist Intelligence Unit notes how mainland companies are linking customer service with long-term financial success, but overlooking the importance of customer-service staff training. Nearly 70 per cent of mainland companies surveyed acknowledged that customer-service failures bring about significant financial impact and 21 per cent of mainland companies see customer service as their most primary competence.

Johnson Kong, Hong Kong CEO with global accountancy firm BDO, says it is worth noting that while mainland companies emphasise customer service, only 35 per cent plan to invest in staff training during customer service during the next 12 months. This figure is lower than the global average of 45 per cent and places the mainland at the bottom among the surveyed countries, which includes Canada, the United States, Australia, Britain and Germany.

Kong says the survey figures indicate that mainland companies are investing more in defining services standards and goals and upgrading customer-facing technology. “This shows that China not only realises the importance of customer experience, but also practices pinpointing strategies, though staff training is yet to improve,” Kong says.